(ABB) ABB Limited – Long-Term Contract with China’s LNG Shipping

Recently, ABB Ltd. (ABB) entered into a long-term Preventive Service agreement with China LNG Shipping International Co. Ltd. As per the terms of the agreement, ABB will provide maintenance services to all ABB equipment that are on board the vessels of LNG Shipping. The scope of the agreement includes maintenance of the power generation plant and the entire mechanical as well as electrical system on board.

Long-term service contracts help improve fleet reliability thereby saving lifecycle costs for a company. This is because such agreements facilitate optimized utilization of the vessel at the lowest maintenance cost possible. The current agreement is for six vessels owned by the Chinese shipping company over the next five years. The contract is effective from Jan 1, 2013.

As per the terms of the agreement, ABB will not only provide complete annual site survey and on-call services for the six vessels but will also provide the shipping company with dry dock service once in two and a half years. Dry docking of vessels is a very important aspect of sea fleet maintenance for shipping companies. Shipping companies during the off-season send their fleet out of operation for complete maintenance and overhauling. Dry docking ensures maximum non-stop services during the on-season.

ABB is a leader in power and automation technologies that enable utility and industry customers to improve performance while lowering the environmental impact. The growing global investment in power distribution, both in mature and the emerging markets, is expected to drive momentum for ABB, going forward. Recently, the company has been making strategic acquisitions to further strengthen its position in various emerging areas of the power industry. In the last reported quarter (1Q13), Power Systems revenue was $2.0 billion, up 15% in terms of local currency.

ABB currently has a Zacks Rank #3 (Hold). However, some other companies operating in the same industry and worth considering at the moment are Quanta Services Inc. (PWR), Willdan Group Inc. (WLDN) and Harris & Harris Group Inc. (TINY), all having a Zacks Rank #2 (Buy).
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